Our buyer was looking at a very nice three-bedroom bungalow that exactly fit his needs. As part of the negotiations, the seller added a clause to the contract that said the buyer would accept a real property report (RPR) and compliance from 2019.

The Compliance Certificate from the City of Edmonton was fine, except the fence encroached about six inches into the neighbouring City-owned utility lot. Discussions were had around the potential effect of the encroachment. Everyone agreed that it was unlikely that the City would ever force the buyer to remove the offending six inches. After these discussions and on the Realtor's recommendation, the buyer accepted the 2019 RPR and compliance.

When we started working on the purchase, we provided the RPR to the lender. The lender wanted either a title insurance policy that would cover a potential City Order to remove the offending portion of the fence. Or, they wanted the buyer to obtain an encroachment agreement with the City allowing the fence to remain as is.

Title insurance didn't help in this case because when the title insurance company saw the fence encroachment, they wouldn't cover it. Our buyer was then forced by his lender to get an encroachment agreement. City fees are substantial, and along with the additional legal work, it cost our buyer between $1,000-$1,200 over and above what they were expecting.

LESSON LEARNED:

• If you are acting for the seller, try to negotiate exactly what this seller did.
•  If you are the buyer's Realtor, the contract says there will be no encroachments. Buyers should NOT accept an RPR with an encroachment unless you are ABSOLUTELY sure it won't affect your buyer.

Protect yourself.

Cheers,

Barry